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More about the Detroit Recovery

I came to China from Michigan, where a circular and cumulative negative feedback loop has driven the Michigan economy down, with Michigan leading the nation. The reason I am optimistic about Michigan’s future is that the core institutions remain intact. Public, private, and philanthropic organizations have shown success in moving Michigan and Detroit in a positive direction. The Flint/Detroit/Ann Arbor corridor remains one of the most highly industrialized areas of the world and Michigan universities remain some of the best in the world. The previously negative leverage seems to be gaining momentum in the opposite direction. The following opinion column has appeared in Michigan newspapers and online at bridge.com .

By the way, it’s a small world. Last September Governor Snyder led a trade delegation of over 20 Michigan businesses to Guiyang and four other Chinese cities.

There’s no doubt that one of Michigan’s biggest stories this year is Gov. Rick Snyder’s decision to put Detroit under an emergency manager, and put attorney Keyvn Orr in that post.

But Detroit is far from the first or only city in the state to have an emergency manager. Though the original title was emergency financial manager, the moniker changed after new legislation took effect March 28. There are EMs in Flint and Benton Harbor.

Allen Park and Ecorse, two small downriver Detroit suburbs, are both being run by the same emergency manager, Joyce Parker.

There’s also been one for the past few years in Pontiac, who is preparing to turn the reins back over to an elected government.

Hamtramck and Highland Park also have had emergency managers, and Hamtramck may again.

Gov. Rick Snyder

Some have been troubled by the fact that while EMs now run cities with less than 10 percent of Michigan’s population, they include almost half the state’s African-American residents.

Undoubtedly, the appointment of emergency managers to take hold of the financial reins of cities in desperate financial trouble marks a dispiriting omen for proud towns around our state. They’ve triggered passionate criticism on the grounds that they dismantle locally elected democratic institutions.

But they’ve also been met with reluctant acceptance by those who realize that there’s simply no other way to cure cities where the Great Recession, incompetence, corruption, denial and half measures almost have destroyed the fabric of urban life.

Crisis brings new resources to the fore

There is, however, an important back story behind our concern for distressed Michigan cities. Perhaps it’s best told by Rip Rapson, president of the Kresge Foundation, which has invested almost $500 million in the Detroit tri-county region over the past 20 years:

Rip Rapson

“The emergency financial manager’s appointment is a single component in a larger suite of activities through which the city is accelerating its transformation. The manager’s efforts will stand alongside a robust and multifaceted machinery of investment and engagement that is expanding opportunities and supporting the continued emergence of a vibrant and essential Detroit unimaginable to some outside observers.”

Rapson cites significant progress in Detroit: A downtown renaissance, with young, educated professionals moving in, triggering an explosion of entrepreneurship and in the arts. A coming breakthrough in public transit, with light rail possible along Woodward Avenue. A more certain, healthy area-wide Regional Transit Authority fast bus system. And some of the most forward-thinking urban planning to be seen in America in decades.

The heavy involvement of Kresge, along with other Detroit-area groups such as the McGregor Fund, the Hudson-Webber Foundation, the Skillman Foundation and the New Economy Initiative, marks the entry in a serious way of the philanthropic community into the future of Michigan’s largest and most-challenged city. The business community and private citizens are stepping up, too, buying police cars and raising capital for the light rail line.

Richard Florida, the guy who brought the “creative class” to our attention, offered an interesting take on all this in The Financial Times: “The nascent turnaround (in Detroit) is driven by a coalition of profit-led entrepreneurs, philanthropic foundations and grassroots groups unhindered by city government. They offer a distinctive model of revival from which cities in the U.S. and beyond can learn.”

The story is much the same in Flint, where the Charles Stewart Mott Foundation has been the primary mover behind the city’s battle for survival. For example, the Genesee Regional Chamber of Commerce’s Area Focus Fund has received more than $22 million in Mott grants to boost the area’s economic profile.

Notice what’s really going on behind the curtain: Civic activities and programs, once entirely run by politician-led city governments, have, over the past decade, gradually been turned over to the philanthropic community and, to a lesser extent, the private sector.

The reasons for this are many. More and more urban areas are, to put it simply, too broke to do much, let alone think ahead. Some cities have allowed a political culture of corruption – “pay to play” – to take over, while others have tolerated inefficiency and incompetence.

There is a feeling that while emergency managers arrive partly as a punishment and politicians are necessarily self-serving, philanthropic institutions have the freedom and ability to work for the long-term general good.

Given today’s environment of gloom and doom, somebody has had to step forward. That’s what the nonprofit sector, philanthropic foundations and the private sector have done. They’re not trying to replace duly elected city governance; they are trying to provide bridging assets designed to support pieces of progress.

They have the luxury not available to elected politicians to take the long-run view and make investments that cannot show results in less than a decade — and shouldn’t be expected to.

Michigan’s future depends to a very large degree in our ability to provide the tools urban areas need to grow and prosper. The great fortunes made in Michigan in years past — Kellogg, Kresge, Dow, Ford — have funded today’s great foundations. That they are stepping forward is reason for hope … and for congratulations.

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.